MAT Q2 2018: 5 Key Trends & Developments

Our latest Q2 2018 trend reports on the OTC market at global, regional and Top 20 level are now available on the OTC DASHBOARD website. Here we highlight some of the key trends & developments that have emerged in the latest data.

  1. Europe and Asia drive CCA upturn: Improving CCA growth helped the global OTC market report a slight upturn in Q2 (+4.2%). This followed a return to CCA growth in Europe (+2.7%) in Q2 2018, powered by the UK (+5.8%) and Germany (+4.1%), while France (+0.5%) also returned to positive territory. CCA growth in Asia-Pacific (+5.7%) likewise improved in Q2, thanks to a clear upturn for Systemic cold & flu (+4.7%), with key markets like S Korea enjoying high growth (+6.6%) on the back of OTC innovations such as the relaunch of Dong-A’s Pantec Q.
  2. Sanofi reclaims the No.3 spot from J&J: While GSK maintains its clear lead as the global OTC No.1 marketer, a tight three-way race remains in play for the No.2 spot between Bayer, Sanofi and J&J. Bayer is still the global No.2, while Sanofi reclaimed its position as the global No.3 in Q2 2018, moving ahead of J&J. In Sanofi’s Q2 results, the company reported a return to OTC growth in Europe and a continued strong rise in Emerging Markets, especially in Latin America. The company reported a CCA upturn in both regions, offsetting US allergy decline.
  3. US market behind VMS upturn: Higher Q2 growth in North America’s vast supplements market (+4.0%) has been the key trend behind the improving global picture. In Q2, multivitamins (+2.8%) underwent a clear upturn while the trend for probiotics (+6.9%) and immune supplements (+10.4%) also improved. The latter category has been a particularly vibrant source of OTC innovation in recent months; for example, Nestle has launched elderberry immune gummies as part of its mykind Organics line, while post-surgery immunity supplements and those with a digestive health crossover have also been popular.
  4. Where’s the growth potential? 1. Adjacencies: OTC marketers are increasingly looking to build new consumer healthcare adjacencies, either via switch – in the case of erectile dysfunction and Pfizer’s Viagra Connect – or new product innovation, in the case of medical cannabis. Canada recently voted to legalise cannabis, though the future for CBD and THC supplements remains uncertain. We don’t yet include sales of medical cannabis products in OTC DASHBOARD, though we do track developments in this category closely in both our innovation database, OTC New Products Tracker, and regulatory newsletter, OTC.NewDirections.
  5. Where’s the growth potential? 2. New territories: Rest of World countries (mainly Middle East & Africa) enjoyed continued high in Q2 2018, with sales up 6.6% in the 12 months to end-June 2018, to total US$9.2bn. High growth for analgesics (+7.2%) and CCA products (+6.7%) ensured a strong regional rise overall, allied with a dynamic performance in the key regional market of Turkey (+13.3%). RB is one marketer performing well in the region, claiming a spot among the Top 5 OTC marketers in Q2 2018, following dynamic growth of its CCA portfolio, powered by sore throat remedy Strepsils and its strong support via A+P and line extensions.

With M&A activity in the CHC industry increasing rapidly, now may be the right time for your business to explore growth opportunities. Our specialist M&A boutique is working with a number of strategic and financial partners to assess potential opportunities — for buyers and sellers — and is well placed to discuss the current business climate and possible synergies. To find out more, please contact ammar.basit@NicholasHall.com

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J&J to buy Zarbee’s

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J&J Consumer has entered into a definitive agreement to acquire natural healthcare products company Zarbee’s Naturals for an undisclosed sum. With a 50% CAGR, the Zarbee’s Naturals business racked up sales of US$68mn in 2017, according to Nicholas Hall’s global OTC sales database DB6, and there is lots of room for growth ahead.

J&J’s VMS portfolio accounts for just 0.1% of its total consumer healthcare business, so the Zarbee’s deal will provide a significant boost (see the table from OTC DASHBOARD below showing J&J’s current OTC sales split by major category). There will also be scope to build the brand internationally – at present, Zarbee’s focus is almost exclusively on the US market, so J&J will likely use its considerable marketing muscle to roll out the brand in other key regions where it has a strong presence, like Europe and Asia-Pacific.

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Founded in 2008, Zarbee’s Naturals is majority owned by the Growth Fund of L Catterton in partnership with various minority owners, including Sorenson Capital. The deal, which is expected to complete in Q3 2018, will include the full line of Zarbee’s Naturals products for children and adults.

Product innovation has been one of the main drivers behind exceptional growth for Zarbee’s Naturals. In April 2018, the company introduced three Children’s Complete Multivitamins in a gummy format, including Complete Multivitamin + Iron, Complete Multivitamin + Probiotic and Complete Multivitamin + Immune. In partnership with Amazon, Zarbee’s also released a Baby Bee Essentials Gift Set complete with a bee romper and products such as Gripe Water and petroleum-free Baby Soothing Chest Rub. Paediatric products like these will fit well with J&J’s family-friendly image.

As Health and Wellness climbs up the list of consumer priorities, the market for herbal and natural options is booming. Take a look at what the future holds for this market with Nicholas Hall’s upcoming report Herbals & Naturals: Opportunities in a Vast & Dynamic Area of Consumer Health. Scheduled for publication in August, this report will include coverage of 9 leading global markets, analysis into a wide range of categories including Herbal & Natural Supplements, Topical Analgesics, Cough Remedies, Laxatives and more, plus forecast sales. Benefit from early bird rates when you pre-order today! For more information, or to pre-order your copy, please contact melissa.lee@nicholashall.com.

Avon enters VMS category

As this week’s OTC DASHBOARD infographic shows, the percentage of Americans that consume dietary supplements continues to grow, hitting an all-time high of 76% in 2017. This has helped create a vast US vitamins, minerals & supplements category, which in turn continues to attract the interest of companies not traditionally associated with the OTC market. For example, Amazon launched several supplements as part of its Amazon Elements line in spring 2017, including vitamin D, turmeric and calcium products, all of which have a strong emphasis on ingredient traceability.

Another new entrant in 2018 is Avon, a company that is undergoing a rapid transformation to become the “leading social selling company in North America”, according to CEO Scott White. Part of the company’s strategy is a return to the health & wellness market, including the launch of a new Espira line of 11 dietary supplements.

Launched in January 2018, and available at a retail price of US$12-35 through Avon Representatives or http://www.avon.com, Espira for Avon is categorised into three principles of wellness:

  • Restore contains 2 sedatives & sleep aids and 2 multivitamins, with ingredients that help to reduce occasional stress and enhance restful sleep, including Sensoril, L-theanine, vitamin B, magnesium, fish oil + antioxidants from fruits & vegetables
  • Boost is subdivided into Metabolism Boost and Natural Energy products, with ingredients such as protein, probiotic, fibre, green tea, cacao + whole coffee fruit to help maintain a healthy metabolism, clear out the system and control hunger
  • Glow contains 3 health & beauty supplements formulated with antioxidants, biotin, vitamin C + collagen peptides to help hair, skin and nails look their best by protecting from daily damage and restoring cells while you sleep

As with the Amazon Elements range, Avon’s new products will be sold via the e-commerce channel, while the company will also be looking to steal share from multilevel and direct marketers such as Herbalife and Amway.

Self-care in Canada: Meandering Path to New Regulations

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Mathematically, the shortest distance between two points is a straight line. However, in public policy it is rare to chart such a clear direction. Reading through the “What was Heard” report from Health Canada’s public consultation on self-care regulation, which was conducted online in late 2016, there does not appear to be any real consensus over new proposals for an overhaul of all the regulations for non-prescription medicines, Natural Health Products (NHPs) and cosmetics.

Although the report was completed months ago, it was only released in late March this year, as a backgrounder to a series of town hall style discussions on a more detailed set of changes starting 4th April. While the government has developed a more detailed set of proposals that address some of the concerns set out in the report from last year’s consultation, it would appear that those attending the provincial feedback forums will not have the opportunity to digest these details prior to giving their advice. In fact, one of the key findings of the report was that all stakeholders felt that the original outline lacks enough specificity to make cogent comment.

Reading the report, it is interesting how what was heard may not actually be fully representative of what was said. For example, the report concludes that “many participants in the consultation see considerable value in the clarity that would be provided by a single regulatory approach to all three affected areas” (i.e. cosmetics, NHPs and OTCs). What the data show is that in virtually all stakeholder categories, the support across several key measures was only around 30%. Taken another way, roughly 70% or more of the stakeholders would not be more confident in these proposals.

The report notes that most of the concerns came from the NHP segment. This should not be a surprise since all previous consultations were only about moving OTCs out of the prescription drug regulations. For non-prescription medicines, this was round two of the discussions but for the NHP and cosmetics sectors this was novel territory. The visceral reaction was clear given that the NHP community spent years developing a set of regulations independent from drug classification and achieved it through a parliamentary process. They perceived that rolling all OTCs and NHPs into one single regulation was a step back in time, especially given the tone of the documents about claims-based barriers to market access.

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There weren’t many points where all stakeholders agreed. However, it seems there was a strong consensus that self-care products (OTCs, NHPs and cosmetics) “should not be regulated in the same manner as prescription drugs”. Far from an epiphany, this was the basis for the idea that OTCs should be granted their own regulations outside the prescription regulations, just as NHPs were granted such regulatory status. Cosmetics have never been in the prescription drug framework.

There was no consensus on the specific elements of the new framework. The risk-based approach was supported to the degree that most agreed that “products which pose a greater risk of harm should receive greater scrutiny and be subject to significant requirements”. Where the consensus fell into disarray was around the confusion between evaluating products for their individual risk and categorising products broadly into risk levels. The proposal seemed to set out a lower-risk category where claims would be limited and as such the government would not review and license them for sale. This type of product would be supported by pre-cleared information such as monographs.

The logic suffered in some stakeholders’ view since the model would seem to require lower-risk products to move into higher risk categorisation when clinical data would be provided to create greater confidence in the claims. The report notes that “there is no consensus that the proposed risk-based approach would create more confidence when purchasing self-care products”. In fact, 82% of consumers and healthcare professionals and 93% of cosmetics manufacturers said it would not give them more confidence.

The thought of requiring only “scientific” proof to justify health claims met with resistance from most stakeholders (except the five OTC drug companies). Only 30% of all respondents agreed with this notion and that was not highly differentiated across several segments. The support for stricter reliance on “science” (not defined but often assumed to be clinical trial data) was low with consumers (30%), healthcare professionals (33%), NHP companies (21%) and cosmetics manufacturers (30%). On the other side of the argument, academics and researchers were more supportive (60%).

A concept floated by government was that they would not evaluate and license certain types of products based on the types of claims being made. This was suggested to be accompanied by a disclaimer that Health Canada did not assess the claim. While cosmetics already enjoy a similar notification system, most stakeholders didn’t appear to support adopting a cosmetic-like system for OTCs and NHPs. The report notes that “participants are somewhat divided on the use of a disclaimer on products whose efficacy would not be reviewed”.

Despite the lack of consensus on a disclaimer, there would appear to be acceptance that changes could be made that would “facilitate informed consumer choice”. Some stakeholders have proposed adding labelling statements that would make it clearer when traditional evidence was used to support the claim. This, they feel, would add information that enhances consumer choice.

This consultation elicited a very strong response relative to most government consultations. Perhaps this was influenced by the fact that during the consultation period, Health Canada put out a very strong social media campaign and used traditional media stories to “clarify” some aspects of their proposals. With the communications efforts to ensure that the consultation garnered significant and reasoned responses, it should give some confidence in the results.

Perhaps one of the most telling observations related to the confidence stakeholders would have in the newly designed system. Consumers (78%), healthcare professionals (75%), NHP companies (80%) and cosmetics firms (63%) did not feel more confident with the new proposals. In a similar vein, 82% of consumers didn’t feel that the proposals adequately addressed their needs. The numbers were similar for healthcare professionals (78%), NHP companies (81%) and cosmetics businesses (74%). Only two OTC companies felt that their concerns were addressed.

The report concludes that “there is clearly a need for further detail on the proposed approach so that stakeholders may provide more specific feedback to Health Canada as the framework continues to be developed”. No doubt this is true and, as the government heads into the next phase of face-to face discussions, it would have been helpful to have that kind of detail available before asking stakeholders to respond.

Bion 3 Senior launched in Chile

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Last month, Merck KGaA rolled out Bion 3 Senior in Chile. The product – which contains vitamins B, C + D plus minerals, probiotics and ginseng – is a blend specifically tailored to the needs of people aged over 50 years.

The product has previously been advertised on TV using the slogan, “¡Activa tu vitalidad!” (Activate your vitality!), and has also featured in advertorials explaining how the body’s immune function tends to weaken with age.

The latest ad, which came out earlier this month, features a man restoring a motorbike for his mother, who had to give up doing so herself once her son was born. The ad then says “Los soñadores nunca envejecen. Encuentra tu fuerza interior en bion3.cl/senior”, which translates to, “Dreamers never age. Find your inner strength at bion3.cl/senior”. Followed by “Siempre hay tiempo para tus sueños“, meaning “There’s always time for your dreams”.

Nicholas Hall’s report on Healthy Ageing: The Expanding OTC Market for 50+ Consumers explores the existing market for Healthy Ageing OTCs, as well as identifying opportunities for future growth. Taking a detailed look at OTC offerings for 50+ consumers in 12 key markets across the globe, reviewing key brands, sales and strategies, this exclusive report could be groundbreaking for your OTC marketing scheme. For more details, contact ian.crook@NicholasHall.com or CLICK HERE!

New advice says eat 10 fruit & veg per day

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A study by Imperial College London has suggested we should eat 10 portions of fruit & vegetables a day. The study said that such eating habits could prevent 7.8 million premature deaths each year. The study also identified particular fruit & vegetables that reduced the risk of cancer and heart disease.

A portion counts as 80g (3oz) of fruit or vegetables, which is equal to a small banana, a pear, or three heaped tablespoons of spinach or peas. The findings were based on pooled data on 95 separate studies, involving the eating habits of two million people.

Lower risk of cancer was linked to eating green vegetables such as spinach and kale, yellow vegetables and cauliflower. Lower risk of heart disease and strokes was linked to eating apples, pears, citrus fruits and leafy greens.

The results, published in the International Journal of Epidemiology, also assessed the risk of dying before your time. Compared with eating no fruit or veg a day, it showed:

  • 200g cut the risk of cardiovascular disease by 13% while 800g cut the risk by 28%
  • 200g cut the risk of cancer by 4%, while 800g cut the risk by 13%
  • 200g cut the risk of a premature death by 15%, while 800g cut the risk by 31%

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The researchers do not know if eating even more fruit & vegetables than the newly suggested 10 portions would have even greater health benefits, as there is little evidence out there to review.

Dr Dagfinn Aune, one of the researchers, said: “Fruit & vegetables have been shown to reduce cholesterol levels, blood pressure and to boost the health of our blood vessels and immune system.” He continued: “This may be due to the complex network of nutrients they hold, including many antioxidants, which may reduce DNA damage and lead to a reduction in cancer risk.”

However the study also said that the benefits of this would be hard to integrate as many people struggle to even eat the five a day (400g) which is recommended by the World Health Organization. In the UK, only about one in three people eat this recommended portion, showing the huge potential for VMS marketers in terms of targeting their supplements at people that don’t eat their 10 fruit & veg a day.

Vit D may prevent cold & flu

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“The sunshine vitamin”, also known as vitamin D, is vital for healthy bones and a strong immune system, says an analysis published in the British Medical Journal. This study also suggests that foods should be fortified with the vitamin.

Public Health England (PHE), however, argues that the infections data is not conclusive, although it does recommend the supplements to improve bone and muscle health.

According to the research, the immune system uses vitamin D to make antimicrobial weapons that puncture holes in bacteria and viruses. As vitamin D is made in the skin while out in the sun, many people, particularly in the UK, have low levels during colder seasons.

Trials on using supplements to prevent infections have so far given varied results, so researchers pooled data on 11,321 people from 25 separate trials to try to gain a more conclusive result. The team at Queen Mary University of London looked at respiratory tract infections, which covers a wide range of illnesses from a runny nose to flu to pneumonia.

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The study overall said one person would be spared infection for every 33 taking vitamin D supplements. That is more effective than a flu vaccination, which needs to treat 40 to prevent one case, although flu is far more serious than the common cold.

There were more beneficial results for those taking pills daily or weekly, rather than in monthly super-doses and in people who were lacking vitamin D in the first place. The main purpose of vitamin D supplements is to normalise the level of calcium and phosphate in the body, which are crucial for the growth and maintenance of healthy bones, teeth and muscles.

In extreme cases, low levels of vitamin D can cause rickets in children, where the bones become soft and weak and, in some cases, misshapen as they continue to grow. In adults, vitamin D deficiency can lead to osteomalacia, which leads to severe bone pain and muscle aches.

One of the researchers taking party in the study, Professor Adrian Martineau, commented: “Assuming a UK population of 65 million, and that 70% have at least one acute respiratory infection each year, then daily or weekly vitamin D supplements will mean 3.25 million fewer people would get at least one acute respiratory infection a year.”

For more vitamin D developments, please follow this link.